Economy

IMF Chief Voices Worry About Global Expansion

Thinkstock

The International Monetary Fund (IMF) is one of the leaders in tracking the global economy. Its leader, Christine Lagarde, Managing Director, recently said her concerns about the global expansion have grown. The world’s economic improvement, nearly a decade in the making, may have peaked.

In a recent address she said:

Indeed, there are signs that global growth has plateaued. It is becoming less synchronized, with fewer countries participating in the expansion.

In July, we projected 3.9 percent global growth for 2018 and 2019. The outlook has since become less bright, as you will see from our updated forecast next week.

A key issue is that rhetoric is morphing into a new reality of actual trade barriers. This is hurting not only trade itself, but also investment and manufacturing as uncertainty continues to rise.

The theme among economist that trade wars may kill expansion grows by the day. While an update of NAFTA may prevent such a war among the three nations in North America, tariffs on goods and services worth $250 billion traded between the United States and China already have started to bite.

She added:

Moreover, after a decade of relatively easy financial conditions, debt levels have reached new highs in advanced, emerging, and low-income countries.

In fact, global debt—both public and private—has reached an all-time high of $182 trillion—almost 60 percent higher than in 2007.
This buildup has left governments and companies more vulnerable to a tightening of financial conditions.

Emerging and developing economies are already feeling the pinch as they adjust to monetary normalization in the advanced world.

That process could become even more challenging if it were to accelerate suddenly. It could lead to market corrections, sharp exchange rate movements, and further weakening of capital flows.

A recent analysis shows that annual interest payments on U.S. debt will soon swell to equal the entire amount of the American defense budget.

The message was mostly a negative one, which more and more made by experts on the topic are.

The #1 Thing to Do Before You Claim Social Security (Sponsor)

Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.

A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.

 

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.